This story was delivered to BI Intelligence " Payments Briefing " subscribers. To learn more and subscribe, please click here . The Consumer Financial Protection Bureau (CFPB) released its long-awaited prepaid card regulations, which better govern the fast-growing prepaid industry. The list of rules includes requirements for upfront fee disclosure, elimination of overdraft fees, better fraud and loss protection, and more stringent requirements for lines of credit. Most will go into effect on October 1, 2017, but some will come the following fall. The new rules will impact prepaid cards, but also other stored-value products, all of which have remained largely unregulated. Prepaid cards: Pew estimates that 23 million US adults use the cards, and volume increased from $20 billion in 2003 to over $300 billion last year. As the space continues to grow, and more consumers take advantage of these products instead of checking accounts, protections that mimic those afforded to bank accounts will be key. Other products: Despite pushback, stored-value products will also be covered. Those include peer-to-peer (P2P) products like Venmo and Google Wallet, and fintech services like Dwolla. Though mobile wallets that store payment information without funds, like Apple Pay, are exempt, it’s plausible that preloaded retail-based wallets, like the Starbucks app, might be included. This area is also fast growing — BI Intelligence estimates mobile P2P will reach $174 billion by 2019, up from $5.6 billion in 2014. The regulations will make prepaid card products considerably more consumer friendly.Prepaid cards are popular predominantly among un- and underbanked consumers, which seek them out because they seem like a more affordable alternative to traditional checking accounts. But high and widespread fees — 68% of prepaid customers pay a fee of some sort — might actually overshadow any benefits the card provides. Increasing fee disclosure and limiting […]
